What is the main financial impact of the pension plan conversion announced by ADI?

The primary financial impact for ADI is a projected GAAP charge of approximately $220 million in the fourth quarter of fiscal 2015. This charge is to settle all existing and future liabilities associated with the Irish defined benefits pension plan.

Will the pension plan conversion affect ADI's reported earnings on a non-GAAP basis?

No, the company explicitly states that the results of this action will not impact its non-GAAP financial results. Investors focused on operational performance should look at the non-GAAP figures.

How will the conversion of the Irish pension plan be funded?

The conversion will be funded by the existing assets of the defined benefits pension plan, along with an additional contribution of approximately $210 million from Analog Devices to cover all associated liabilities.

What happens to the benefits of current retirees from the DB plan?

Benefits for retired participants of the defined benefits plan will be managed through individual annuity buyouts, handled by the DB plan trustees.

ADI 8-K: Earnings & Results

Summary

Analog Devices, Inc. (ADI) filed an 8-K on August 18, 2015, primarily to report its financial results for the fiscal third quarter ended August 1, 2015, and to announce a significant change to its Irish defined benefits pension plan. The company is converting benefits from its defined benefits (DB) plan to its defined contribution (DC) plan. This move is expected to result in a charge of approximately $220 million in ADI's fourth quarter of fiscal 2015, which will impact GAAP results but not non-GAAP financial results. The company will fund this conversion through existing DB plan assets and an additional contribution of about $210 million to cover all liabilities related to the DB plan.

Key Highlights

1ADI reported its Q3 fiscal 2015 financial results on August 18, 2015.
2The company announced a plan to convert its Irish defined benefits (DB) pension plan to a defined contribution (DC) plan.
3This conversion is expected to result in a GAAP charge of approximately $220 million in Q4 fiscal 2015.
4The charge is related to settling all existing and future DB plan liabilities.
5ADI will contribute approximately $210 million to fund the conversion, in addition to existing DB plan assets.
6The conversion will not impact ADI's non-GAAP financial results.
7Retired DB plan participants' benefits will be managed through individual annuity buyouts.

ANALOG DEVICES INC 8-K Report, Financial Results (Aug 18, 2015)

Summary

Key Highlights

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